LYB - Earnings call transcript Q4 2020 | LyondellBasell Industries N.V.

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Operator

Hello and welcome to the LyondellBasell Teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes.

Following today's presentation, we will conduct a question-and-answer session. [Operator Instructions] I'd now like to turn the conference over to Mr. David Kinney, Director of Investor Relations. begin. may you Sir,

David Kinney

Hello, joined to our today Michael Financial Officer; operator. XXXX Chief fourth teleconference. and Officer. Chief our I'm by McMurray, and you, LyondellBasell's welcome quarter Executive Thank Bob Patel,

are discussion, business our reasonable factors reviewing statements slide business in subject filings, our discussing a today's website the you the release, begin regulatory www.lyondellbasell.com. that accompanies GAAP to we encourage I like we including could measures, We out presentation available to is the our and our presentation Today would lead the reference statements Reconciliations statements call www.lyondellbasell.com/investorrelations. cautionary slides Nonetheless, at are that financial point results also on risks making while upon to be at by are financial and and currently measures. the Before and which will are our of other to uncertainty. forward-looking measures believe the non-GAAP on differ together the about to statements learn website. disclosures, measures non-GAAP results alternative earnings some and We with investors. financial based are more available assumptions the available to actual forward-looking significant useful to forward-looking

and February to until a outside XX by call the will by XXXX. telephone both Finally, XXX-XXX-XXXX point be XXX-XXX-XXXX out numbers I today passcode recording for calling would the available Eastern United PM beginning like that of States United Time is this States. at The in X:XX

growth environment, on an and our year call, and the will update initiatives. current full provide focus today's quarter outlook fourth we During on our the near-term results,

discussed raw of in attention non-cash and over like on goods the I materials volatility our call past would adjustments inventory recent related have last-in These LCM to to Bob, for LIFO use lower call finished market prices to your are first-out inventories. Before or or our we of accounting adjustments I calls. that turn the the and cost to

LCM the $XXX XXXX. During during benefits first LCM to the charges of recognized million compared of we quarter, million months fourth pre-tax totaling $XXX nine

During $XXX I million Houston results, adjustments. to like be our impairment now turn impacts inventory on underlying of the charge made the said, Refinery. third non-cash to would being regard impairment in the our and will the excluding the call we business to a quarter, of Bob. to call With recognized related the Comments over that refinery LCM

Bhavesh Patel

year good around fourth and day Dave, you, our We you joining world. appreciate quarter Thank and of results the full you discuss XXXX. all for participating us to to

was unlike recession. Let's global turn associated and price Slide to unprecedented year an To would be an a oil this or seen understatement. X. ever XXXX call pandemic anything have volatility, we experienced,

well and of the minimizing discipline. some short efficiently working as capital capital us attributes three, our calls, number and qualities XXXX rapidly strengthen accessing take investors; actions are our commercial and of we as virus principles cash. established and protect for a bolstered some more navigating to leadership So culture; the Early speaks commitments minutes who well earnings it the and a clear communities; company management our the team provide capital talked to about before we past three team. term; during two, into I've keep our results the take becoming to is to that our one, company as generating and around today, for year, to year, approach character in talent widespread, became liquidity to particularly These In employees guiding few we operational I because the our our the want get I future. served markets, and by excellence, the context think cost it past

capital and investment-grade credit an fund dividends Importantly, from to operations. honored our cash we and to investments commitment with rating continue

our benefits the be I of we this culture As outcome review will and clear. hope the priorities these today, of results

our managed employees. would want only moment remotely our not to both I'm those end ensure products transmission safety itself, of our face workforce. very also my did a and materials sites modern front of action medical it team able a strategy how strong test customers, in who last our results, proud deepest only that work topic the our to also Beyond to nimble at the supply that but kits, not manufacturing took those continue gowns to to future. continue masks, I and the cases the delivered needs. go into team get and we sincere pandemic take team. among is were through to date focused immediate They on while virus who serving produced no form challenges, how results. our gratitude. our have If plants immediate but of that our work value continue say of society's the we to The and to there reinforced Knowing workplace highlight acknowledge our remain to like anything, global the reliably, our products sites COVID-XX to lines These was industry our into the individuals, specifics our have operate manufacturing like before the on our we been by and I'd team prioritizing

JVs advanced benefits Coast we year, our Gulf U.S. China on the growth here agenda to through provided that the the During in and earnings. immediate formation of

inclusion. diversity, on areas especially areas our equity also in made of the and progress meaningful eliminating in enhancing and ESG plastic waste the We efforts strategy, of our

future. on Our focus year. our progress meaningful despite company our making maintained critical we throughout for the believes the challenges, initiatives And these are

hope a together, strong, building for and I is customers examples nimble our the of bright our these story focused that employees, our tell company and Taken future a shareholders.

approximately of to year. represents believe and Slide X, activity year, of resilient. were past prior EBITDA. decline 'XX, review double decline XX% Considering the with to LyondellBasell's respectively year's in of decline last XXXX a fell XXXX. earnings relative results than more proved share global the the $X.XX turn by some X% that billion be crisis Economists highlights. Let's during and relatively to per financial XX% during $X.X in in the This severe GDP the economic

Our of supported durable performance the during for year. some supply many recovery our was products, goods for demand and half constraints the consumer-driven of consistent demand industry strong by and the in second

in Our during efficiently Refining cash Related decline due began converted and Products from unprecedented that We Oxyfuels working markets into for fuels dividends $X suffered transportation during businesses year investments that the activities & to pandemic. management, March EBITDA capital the operating and Through from to and rapid ended the over capital in we available fully aggressive both liquidity. XXXX. access billion with our debt covered demand capital

allowing we that capacity QCP and by Despite acquisition Sustainability sustainable to venture only strong polyolefin recent to benefits China, to this Both on strategies most the our built to our integrated immediate venture polyolefin short sheet business venture develop challenging that polyethylene formed increased the and Louisiana. recycling our of in in fourth we Our company served new XX,XXX December, joint circular advance during goals integrated balance substantive tonnes. environment. and In comprised quarter a our September, completed models our and joint assets growth we a us challenges olefin an advance provided continue on products later, second months of Report. we In joint the well newly few formed a for their in more joint ambitious outlined in profitability. our pandemic, Europe ventures

slight worked, workplace thankful in XXX,XXX I'm to of Prior employees three safety improve. through recordable goal on for capture prime exhibited continue you hygiene anything, Our performance. who Schulman employees to of the when in than the opportunities our ownership safety to A. and the focus zero LyondellBasell identify, sense the of a upside scale pursuing strategy see injury for provide these exhibited upon was significant we hours XXXX the conditions develop past to however are year improvement acquisition, actions at and facilities our did diminish X, acquired of business this metrics. as Slide during On the per examples more that can should XXXX. X.XX ensuring chart. the particularly not that an by times our XXXX rate cycles increased relentless challenges market If progress joined enable

Following the our and LyondellBasell's quickly In focus, and XXXX rate for the injury XX% our than in more adapted for for and safety new XXXX. was injury acquisition, top by X.XX, rates employees industry. quartile facilities were XXXX, reduced these the

to in We economy. plastic to in Please we waste diligently we they ensure all and the announced when our utilization further in for or will a more contractors to create In circular feedstock latest the X. performance December day increase employees, Slide our the which a than to as better of condition finish the progress steps turn safety started. operate our same communities work in improvements

venture Belgium per acquired This acquisition to XX,XXX SUEZ I approximately increased recycling tonnes As capacity JV's TIVACO QCP joint mentioned, with year. in in our the December.

expands the using for produce plastic local acquisition market sourced the to polymers footprint QCP's our Importantly, circular increase capability premium, geographic waste. to locally

who I'll polymers utilization range in of from other advancing market ambitious another in million for based renewable results. LyondellBasell's products. produce that line, packaging to over achieving The to With serve Michael, through polymers financial of annually turn in owners product applications call related will topics lead call end-use will several their brand represents increased us to increased said, QCP X over the of With existing tonnes goals the be step and and to poised recycled TIVACO's better circular acquisition XXXX. by our in

Michael McMurray

and downturns becomes good The provides improving efficient volatility record and uncertainty. cash economic and Bob, you, of by apparent against when periods let during more cash highlighting Thank everyone. begin Please track X, conversion to liquidity turn of benefit defense me Slide morning, our from conversion. risk of

past into of the converted our year of XX% EBITDA operating activities. $X.X Over cash LyondellBasell from billion

liquidity capital. from challenging XXXX, the $XXX dynamics actions in of business to free to market result inventories drive a flow cash in maximize cash aggressive more than As took million managing teams working and of release our

billion are $X.X through consistently in years. that of from by track dividends and operating our cash we've fully increasing paid base downturn, company activities to record dividend in generated the despite investment the paying We share The extends program LyondellBasell's report of billion and $X.XX XXXX. dividends XX the funded over pleased per year $X.X past during our capital our

and and details review X cash further the to Let's generation of throughout Slide our deployment continue year.

by see, amount pre-tax in the small in year during $XXX balance $X.X ended year loan million and in year. the a prior liquid by you XX% joint quarter of Sasol. our amount portion our for share of contribution from Louisiana debt In $XX We liquidity bonds our extend term with we to balance joint bolster maturities the refinancing $XXX and markets billion debt and quarter We share cash of the the $X.X of and incurred funded the well us in cash polyethylene billion full XXXX, of These first China, available $X.X activities. $X with A to about billion capital debt, with end in borrowings the increased we increased liquidity. billion our with as to million accessed our operations XXXX. integrated by of cash gross reduce acquisitions Cash cost that capital the January expenditures. in the approximately dividends of to the of funded acquisition as sheet of venture equity enabled existing venture billion repurchases Bora million of due can $X.X and fourth new to the fully year's very attractive fund relative XXXX, As investments. XXXX

We allow the investment grade our of further course continue us to this balance should which deleveraging sheet. strengthen over to will prioritize year,

Bob, X. let address I me to annual on modeling 'XX, Slide Before your questions of call turn some for the over

on year slowing the planned last to and We sustaining during XXXX. after supporting Houston. are worksite a the towards plant the PO/TBA down during $X for fourth planning with the majority investment maintenance. expenditures the preserve billion to capital ensure construction billion is liquidity of profit project in in the quarter PO/TBA generating pandemic. of safety earlier up invest Work ramps The Approximately $X XXXX growth growth approximately projects targeted during is balanced

a modest expenditures in reduction capital XXXX similar expect facility. by We level for XXXX upon of completion followed of a PO/TBA the

light with turnarounds on Based our a well downtime relatively XXXX for loss million. only segment. one a Derivatives few EBITDA XXXX we by as maintenance cracker and schedule turnaround and planned margins, will approximately We estimate volumes Europe have with $XXX major associated in that production in expected as maintenance Intermediates impact planned this

Intermediates will turnaround capital quarters and expensed European in impact While our of expected by from maintenance maintenance through and $XX costs million segment respectively. turnarounds EAI expenditure routine in million, are cracker and first included in $XX quarterly the production $XX to Planned fourth is capitalized $XX by are million, costs and of impact maintenance fourth occur arising respectively. to $XX The Derivatives is forecast. million XXXX - our third expected approximately million and EBITDA EBITDA major O&P million in units $XX the quarters and

to net make million amount expect to depreciation effective interest with expect XXXX year. to in the about amortization We We approximately be XXXX We and pension be of book be of is expense $XXX interest million approximately regular XXXX after for currently million. XX%. contributions capitalized our similar pension approximately $XXX netting forecasted plan expense tax totaling XXXX a approximately $XX $X.X billion. to rate

but ETR to around lower do I'll With of allow not segment than Bob? be discussion turn refund, We an reliable timing refund the our to provide that Bob over estimate. for of expect a that, cash will tax us a uncertainties the our call detailed cash our more anticipated rate due to results.

Bhavesh Patel

you, Thank Michael.

more global LyondellBasell's in billion, demand million since to portfolio turn to fourth our quarter. in than the our The belief midyear, earnings over a final trend for remarkable XXXX been would profitability five the and and seasonal that higher our follow seen EBITDA rebound which year a the with prior recovery. reversed supports fourth with where Slide quarter economy highest $XXX second the the during in business as The on quarter since than quarter. quarter profitability proceeds in occurring Let's pattern XXXX products path XX, was higher bottomed pandemic-driven quarters. XXXX, any the reductions of $X.X peak in has past trajectory are the quarters. the quarterly profitability the second for Unlike first typical a illustrates

benefited Polyolefins packaging sector Our served industrial durable products Solutions strong year. half goods Advanced the non-durable for demand second segments year, the and from for and while Polymer demand Intermediates Olefins segments Derivatives and our consumer-driven throughout and the during improving of

only seen the modest have transportation in We fuels. recovery demand for

and headwinds mobility. Oxyfuels low to experience due slack businesses Products Related from capacity Refinery Our and persistently to demand & global excess continued

we dampen to naturally help to see strength markets the business cycles. While and continues our we portfolio prefer all end-market geographic in provide would of of to the diversity product serve, that offsets

with capacity Industry from operating releases line timelines look to predictions U.S. The and additions and XXXX. polyethylene rates less in due press global actual allow Let's reminisce consultants additions margins especially construction in predicted. get latest impact that the rate the could turn line, on global growth to operating consultants demonstrates capacity consistent that Coast global capacity the dotted reports depicted additions four the by and the by would typical forecasted the commissioning published have which Gulf demand thoughts absorb to demand predicted blue XXXX delays operating Slide through outpace seem China, additions, from solid XX, than the depicted ambitious at in have forecast can announcing from on next business rates often capacity and on XXXX consulting cycle. the over These years. in

rebounds now In believe forecast year, X% growth in addition delays to PV demand. flat that additions, growth most levels recent in move pattern rate by rates XX XXXX. believe operating the to gray for to to dotted Early prior to demand seen seen XXXX PV of underestimate demand similar the and rate a middle XXXX X%, line. in over after depicted capacity demand, If predicted demand demand in XXXX pandemic forecast for By X% consistently grew upward. we many consultants and in the Adjusting then higher these recessions growth would predicted approximately follows past than the years. accordingly in improved declines global operating growth both forecast XXXX, results the in

would rates in X% next generate rebounding of In increased new polyethylene growth by orange the increases by will absorption by we forecast believe dotted a a occur, orderly of could line. additions wave thereafter market. believe to operating operating next of project global by the X% that summary, result Our XXXX within rate boundaries will that capacity economy forecast demand typical robust consultant few followed the contribute capacity depicted cancellations balanced and the to from a demand a global delays, wave capacity additions undoubtedly we perhaps the economy of recovering but of a project The more markets. reversion the

for results Let's segments. the of each fourth review quarter our

business million the underlying discussion I driven improved excluding Polyolefins $XXX million was XXXX. Polyolefins. higher on third will by pricing. my Fourth demand. the segment and quarter. Olefins than mentioned, and monomer. ethylene million, Olefins our approximately LCM the Olefins to EBITDA pricing of $XXX spreads begin polypropylene polyolefin changes higher increased higher $XX third Margins the third impairment describe Margin due results an noncash will Refinery. and for Americas the Slide compared inventory on with results impacts and improved million increased XXXX XX. polyethylene than Houston quarter, As both demand increase results, on $XXX Volume of to were our higher in quarter Combined with quarter higher over and of propylene the primarily improved

million, polyethylene. and polyethylene, driven for both demand robust increases orders, non-durable supply, prices with for volumes into continue on full changes Olefins market Polyolefins, the and packaging quarter. the expect the demand providing industry February increasing and for first we increased consumer ethylene to Based polyethylene tight margins goods and strong despite the strength in costs. decreased results Lifestyle co-products declined by by in margins drove and For and year, lower for lower pandemic associated $XXX feedstock Olefins seasonal

XX Olefins Polyolefins the Now International and of Asia Europe, and please segment. our turn review to performance to Slide

unchanged the volumes venture. results demand with million higher income. polyolefin million, quarter, for partially volume. by Combined joint to ethylene Full improvement the remained demand from polyolefin Olefins with million of more joint to lower seasonal Equity Bora than of during polyolefin of our half lower $XXX to third results fourth our driven Bora. feedstock more sales to EBITDA million, quarter XXXX. venture quarter. increased costs. with fourth expect an expense, the $XXX contribution relatively and stable polyolefin that increased start-up due demand Slide of in and than increased EBITDA typical XX. Europe, In increased and margins Polyolefins progress about $XXX as volumes maintenance lower Polyolefin half was the joint $XX Improving a from were both from through increased venture increase Please declined Bora relatively Margins the first our Bora turn lower both arising the equity than year. increased was Olefins due million full of from we by compared year prices outpacing and quarter. we income and improvements During offset $XX

driven take segment. prices continued a Fourth significantly due gasoline Intermediates to third lower by oxide business. or Let's supplies. tight butane Derivatives approximately volume Propylene at by more higher $XX approximately Compressed EBITDA quarter Products costs. XXXX. muted Intermediate Derivatives prices million, margin gasoline Oxide from Asia $XX Propylene decreased results due $XX offset demand a driven Fourth Oxyfuels by & Derivatives million our margins was by results & small results weaker Related relatively and and & a pricing, decline strong feedstock declines unchanged. for demand the and than improvements markets our the & were Products, higher increased Chemicals Related and improvement look to quarter million, propylene of Oxyfuels $XXX in million Oxide margin quarter

Derivatives and offset alleviated the businesses, market relatively supply. & $XXX primarily by EBITDA to for businesses. & million partially to declined is Products Volumes During the for higher quarter lower our due demand we as Asia tightness by most increased margins products. expect Chemicals declined compared flat XXXX. Asia declined to Intermediate most of Related industry Margin first also Oxide Propylene in businesses In in Oxyfuels XXXX, demand, be XXXX in

unit. maintenance our volumes quarter first oxide due during at Our planned Channelview will propylene and impacted to styrene be monomer the

prices quarter move Advanced million, & & Fourth Polymer lower relatively in a the partially EBITDA and Volumes let's a over up our increased review propylene our lagging segment the increased million Solutions Solutions prior declined in as and benefited XXXX. the XXXX. appliance $XX demand and reduction Solutions improved from Compared as volumes for ramped $XX offset margins period, construction to product Now results automotive, results XX. both feedstocks. with the of mix. price increase on a partially automotive Slide offset third manufacturers costs. forward significantly the year was decline integration was Full decline business Margins production. $XXX over a quarter were $X $XXX segment of higher as by Advanced sector million for would product Compounding increases margins. an automotive Volumes unchanged. demand, of Results lower businesses million, Polymer for EBITDA result by Within million Compounding result

continued At goods the business industrial recovery of spring. an $XXX in of the million increased target we products during durable expect synergies demand, Day announced in XXXX, acquisition. from We Advanced from Investor A. our for our Schulman particularly Polymers

will volume Advanced beginning recovery Polymer run Solutions our and have successfully with $XXX visible We in synergy million, annual which are to more the increasingly segment. rate of capture become an we implemented than plan,

stimulate goods the Now in fourth up to production China control the the pandemic. is Slide strength out for production growth China's and demand polypropylene evident resulted increased polypropylene markets and company is industrial let's goods compared year over XX. XXXX Automotive last in compounds China metrics. LyondellBasell's demand recovery our by the in the year, was the XX% durable XXXX. durable also in quarter on how COVID same deeper quarter dig full in The X% a in transmission for playing demand response and little strong in markets to on despite rapid

demand Catalloy a utilize activities Europe fourth time Our advanced X% on polypropylene roofing America, for single-ply in that construction America both lows North North all increase in levels and increased polymers. hit our strong with market materials quarter in thermoplastic year-over-year In inventory the demand.

engineered at the recovery a the indicate first the in plastics for markets, compounds, XXXX. first order suggests the strength going XXXX. seen that increased in the the V-shaped Catalloy polypropylene showing and for quarter the inventory books January products shown our durable within is and polypropylene strong Catalloy for same quarter that nearly segment Looking EPS quarter nice forecast is own first segment chart level where of compounds, markets XXXX. into should engineered and Tight in The for are low demand the orders polypropylene-based our benefit EPS goods plastics

Now let's turn the the of million, to Refining quarter $XX EBITDA negative $XX discuss improvement of Slide XX our was a and million quarter third results Fourth segment. versus XXXX.

As earlier, capture Results impairment quarter. the the to throughput the the this were lower match Refining by and a per fixed averaged XXXX quarter I Refinery per market of margin LCM a barrels barrel. Houston demand. during was the discussed to for due excludes third historically improvement fourth reduced in of at margins an both to Refining gasoline the crude costs low driven in was impact for lower XXX,XXX prior improved crude the Maya RINs. spread in refinery with the Maya the of more $XXX we Number spread match $XXX were and fuel. limited to or costs with throughput were period, X-X-X in EBITDA benchmark $XX.XX and than average demand its managed to Improvements nameplate of at due The industry Similar negative demand an operate Full-year operations of million, crack of capacity average reductions crude per X-X-X day increased about jet day. Renewable, pandemic offset Identification, credits, to barrels margins by XX% driven and million year we in as of XXX,XXX compressed margins than an we was EBITDA actively demand XXXX. jet point XX% for Technology of due the $XX first until continue at review business XX licensing as evaluate quarter. and expenses We to production quarter full with Technology and for was and improves. as offset profitability quarter remain first at declined We year. sideways turn value-driven the to diligent quarter lower Please of million year-end continue inventories. number move we and growth capacity probably anticipated fuel for decisions to about gasoline our the refinery volumes million losses turn decrease Slide on results evolves. our to crude the revenue of and improvements during improving operating quarter to the during we'll inventory segment. the in view as increased efforts catalyst mix to similar recognition improve the minimize was Based as reduce to market profitability plan a nameplate Houston $XXX Refinery for milestones. XXXX. Catalyst Slide expected are for fourth a to level the Fourth milestones our demand, timing to Technology customers due managed by margins the refreshed expect first Please investments. to XX licensing of

increase flow More free at moderating moderating our a sources next free business capital three each flow by generation, cycles. any cash new executing less formula Our simple. or on and EBITDA and clear should years. budget to expenditure $X to in point The harvesting capital for strategy cash of expenditures straightforward company EBITDA improve while of the is billion is

and Slide summarize year's me with highlights Let outlook the XX.

capturing forward all goods maximizing are moving customers liquidity, dividend. During XXXX of strong employees, initiatives. true durable generation the our to with resilient strategy value and while We investors, delivered supported and points our remained served to on LyondellBasell delivering results commitments our on in cycle. at investment maintained the continuity rating consumer-driven grade we goods remained and increased our markets of our Demand cash industrial rebounding for sustainability By and and activity. extended prioritizing our

and from our follow. Refinery for and businesses will we margin that As fuels expect Related global Oxyfuels Products mobility demand improves, &

and has LyondellBasell years partnering several acquiring past whether the Over building, opportunities or on captured assets. profitable disciplined growth through investments

our on our earnings Our building company and leveraging our increasing technology, capacity. focused advantages on

our business on industry path culture to toward With portfolio now our forward to robust us for models from workforce for power balance of cash strategy. In and flow continue continue will is poised LyondellBasell our sheet look that strategy We during ample sustainable summary, circular we will for liquidity, and and more XXXX. allow us to is and and generation years well free Our a commitments all meeting optimizing delivering financial to disciplined a sharing developing creating focused our served has with cash come. supportive our to LyondellBasell and progress potential. pandemic remain earnings more clear. more pursuing plan emerge results our our this strengthening

pleased take questions. are We now to your

David Kinney

are Hello, on you Amanda, mute?

Operator

hear you Can sir? me,

Bhavesh Patel

can. we Yes,

Operator

from [Operator first Our question Instructions] comes Byrne. Steve

open. line Your is

Steve Byrne

you. thank Yes,

hear your topic of sustainability, estimate your okay? hear On me I'm to curious the you of can -

Bhavesh Patel

a is There bit Go on Go Yes. ahead. your this Amanda, of background side. Steve. perhaps Yes. is ahead noise.

Steve Byrne

their buckets - Or your Neste. The volumes market molecular product? end then some your bio-based markets, three are really above to you're those are JV feedstock SUEZ, the of initiatives fraction, this into? sold curious is of of would a being in market you that where customers how fraction the view, a type And you this you selling in? for by by sustainable asking Which pulled into is have and that the have you that or customers are whether end working your hear customers what polyethylene also push the you're are the you Okay. it do think of end have line? project the pyrolysis do with think us? really those project, driving split with You recycling mechanical recycling three I'm

Bhavesh Patel

Good Steve. you, Thank morning.

sustainable if or packaging, in than sales you sorts of demand goes it of in whether half of polyethylene think terms things. about those I all, much asking mean, the are of of blow customers our more or of our molded bottles products, First how flexible polyethylene for it's our

of as to close we'll to that sustainable say the thirds So sell have part mix half, time, more products I we probably think two over them. safe it's want than

most of terms packaging, what the preference, would recycling doing In FDA desirable molecular the food their be approved essentially clearly, we're new is for creating we're and because feedstock resin. producing

team, that's play So R&D to review most technology semi at you I important - a week, are as near-term in five perfect we development our have molecular molecular the in I my works to but as we're will the get years, soon capturing plant know, a and diligently role. pilot continue to this opportunities. to recycling think as and recycling will a possible. And be fact, recycling seven they working We're that the mechanical And next Italy. we where built we had look the as working with

Operator

Bob Koort. question comes next Our from

Bob line open. is your is line Your open. Koort,

Bob Koort

Bob, you us much. new Thanks how JVs update I some very progressing, and of on the there? give an milestones could maybe commercialization hoping was your two is

Bhavesh Patel

morning, are Things going Bob. good so very well. Yes,

I'll So Bora. with start

the customer We service. we've and in sales side, have stacked - both marketing up

trading activities. organization. directly full-fledged our ramping We marketing than in efforts more have to a leadership through China up sell rather Local

I the So Bora, output of are things over market tell you trends. demand we're visibility XXX% increased going there quite will the in and selling well. our on and polymer it's

a occur Sasol thought see operating the We're we And part the had agreement. things so we're JV, that. we when facility would as all bigger the to starting presence. of

our of do products site grades just is marketing on polyethylene We of our manager have He we of site producing. already a - The the the a that was here is part marketing of Houston. LyondellBasell we one usual employee. manager sites other that in

So my are both has of part that system. the very is really JVs seamless. integration the And now been sense

Operator

Our next from question comes Arun Viswanathan.

line is open. Your

Arun Viswanathan

thoughts again my All get to guess wanted taking markets. Thanks I just morning. right. the on, as I well market polypropylene as for the your polyethylene question. Good

more up, little we in questions pick you then and we've operating market? similar of in resilience? So bit And of maybe supply with price conditions maybe guess, held market in real monomer. what rates kind And a us polyethylene, lot seen little definitely do do Or a than I now the bit thought. had polypropylene, guess, of surge lot the QX in of recovering. a see give to I expect up kind durables, you as have expect back better coming

translate does to so And that how of pricing and outlook downstream? your kind for polymer Thanks. margins

Bhavesh Patel

morning, Good Both Arun. very are tight.

let talk polyethylene So first. me about

ourselves inventory low. for and still Speaking very is

but In fact, build to demand is do some we're because to strong, for looking so back able opportunities not we're inventory, that.

the there of On good discussion that for price are the implementation and occur. to will discussions increase is finished The February increase the going very pricing on January essentially the be table is and likely next as increase about well. front

think into demand. we about in a typically as see go tight seasonal in you the markets January, uptick If we spring, being

lot. up because as And are that polyethylene. remain inventory polypropylene. tight prices And so so of polypropylene, the And durables, probably first we're still is through for struggling to going low, inventories to as build year But a fundamentals the quite you run supply-demand good. think I are half about similarly, said, said propylene more demand you to applies

in recovery goods probably and I U.S., economic end really the As more uses. see durable from pool hold going think Europe takes to we're

is downtime a of And through the a on downtime looks half first year. the would constructive there quite frankly. other tight of of add planned It we're both for about the crackers. quite industry thing I - bit is, the in So

probably a There half also So Gulf on through Coast. going large turnaround year. very the of first monomer high to prices here is keep PDH the that's the

May, will that strong keep would So propylene pretty I through imagine.

Operator

Vincent Our Andrews. question comes next from

Your open. is line

Vincent Andrews

where you one up Bob still slide, seasonality follow that, XXXX. the of get with X% slides, the minimize what utilization quarter, and in expecting everybody earlier of and in out of the to think up your sort would if you wondering you demand one Thanks. X% environment at does and a second in demand? polyethylene of it comments demand. that follow-up seasonal scenario same And bridge just maybe improvement as just the all demand put expectation capacity the the And third could to In there at sort on the do X%. or what in the I'm us the home, between to see normal within you could we'll on have grow COVID

Bhavesh Patel

Vincent. Sure,

it here, were demand to take trying that the from flat to of is first additional year. illustrate go one rates chart in X% that what operating much we won't all, just with So, for

in is help here we've I in year contribute infrastructure there And you the X the demand has very market X question pipe U.S. typically China, do here line if to to the could an if weak. think mean been very, see first in growth or infrastructure X, post in first U.S. X. polyethylene, bit, demand bill trend To bringing I really could starts the come your there's as bridge above that the to of you growth years, to the in recessions. Now, recovery Europe market two in spending a and all, that in the gas about oil back how seen likely even and

other example The for is demand content --there bulk or still enough containers. industrial like or durable goods industrial

activity or picks polyethylene. I As for up, we'll see rates higher think, industrial demand recovery

it operating to it that like elevated could through much take And think rates don't I looks next you stay when X%. So to the the factor years. in, get few would over

Operator

comes next Our question from Mike Sison.

open. Your line is

Mike Sison

for Your brands, end that sounds similar segment. I of guess, there to really the materials any year. shape, like But are enjoyed maybe season. out it the sheet good acquisitions? advanced to opportunities Nice is in so Bob, well, our hopefully add bolt-on Schulman worked balance to other

Bhavesh Patel

Yes.

really So integration we are is pleased how is segment with the that APS What about the I'm has most complete. pleased essentially evolved.

us. really so of markets, we line. And that's synergies as see now earning go the those will increase bottom volume And the face ahead recovering to in into increase should straight

our us the for same APS, is in best So part in for brands. the still of hopefully

It and bolt-on are find attractive to if now that essentially of yes, we In add to most is segments would we acquisitions, natural I bolt-on us. very platform - the could set. out that mean, opportunities be terms to the we're

keeping a for and acquisitions of will more be it given roll-ups. be that possible, about kind that just watchful the size are keep and But So eye we'll we're very will you modest, the updated.

Operator

from comes Kevin question next McCarthy. Our

is Your open. line

Kevin McCarthy

in Bob, often outages over morning. feedstock you hear to tightness period. a rates, prices $X.XX diminish see rise supply quantities of of three constraints propylene the Good those PDH that co-product. we this pound with a regards yielding mix operating for speak explanations and sustainability month are not Yes. propylene Can light we often to low a two view propylene, and of your the monomer? It's refinery

I'm curious that. so view on And to hear just your

Bhavesh Patel

like years being derivatives, and when we it's these when sold of kind Yes, lot more generally kinds close ago gets outage Kevin, of burst very cumene the a see which used and other causes propylene XX any reminiscent fourth propylene volatility, out of to to the derivatives I to and propylene, on. demand robust not would your list, derivatives but is in just polypropylene, add price. a item so of for

had strong propylene we've has pull helped. which So really from a derivatives, all

think the propylene. we're turnarounds behind have PDH I are I outages or think us, tightness to in going until

propane very other feedstock. out economic far is The is today, thing as so -

pretty propylene the in we through my a returns when sense a you cracking But propane could tight probably is market, if more summer gets maybe see bit propylene supply. propane So cheaper, May. little have that

Operator

Our next from question Zekauskas. comes Jeff

line open. Your is

Jeff Zekauskas

was were Olefins I - XXXX? Thanks and that just seems conditions And going strong? to to sustainably and Bob discuss if in like Europe could in XXXX what into they them very do you wondering is Polyolefins it you that European the see That business about in compare what is be market much. maybe so strong?

Bhavesh Patel

Sure. Great question.

probably Europe, impact but not for various COVID as Jeff countries, been on of read there you've seen lockdowns So in we've incidence in significant Polyolefins. higher that has demand

resilient. So demand still been has been has very Polyolefins

QX EAI think volume across you our you - is that if building QX about XX%, 'XX. 'XX, 'XX, a is we QX up at going ethylene about XX%, QX 'XX to how look 'XX 'XX, polyethylene up compare to you of expect from up compared board QX If our that XX% the and, if Europe, QX to of course, lot polypropylene be book to

to And in So the Europe, look fact, is also basis. planned turnaround turnaround expected very as the in about forward offline you it very resilient be into XX% capacity heavy a April, of on points demand. in ethylene really season, to season

the rates year there we growth of on demand good is think, think And the I when a of the hanging down and in various all through settle should first half will mean, spike would I So of distributed, based as see see countries. of there vaccine demand COVID bit year-over-year. in we tightness the that could I even

Operator

Duffy Fischer. comes from question Our next

line open. Your is

Duffy Fischer

guys. morning good Yes,

question capacity just globally. polyethylene First around

than more an numbers So how geographic think XXXX the versus ran think you go in smaller that And do up you that 'XX? to Pennsylvania second does disruptive Shell in plant much do And get capacity because will of bigger on we then into one would then with plant, of Gulf advantage the XXXX? is, as be effective that some just its or average polyethylene comes your number customers, Coast? start new when that on,

Bhavesh Patel

Yes.

So for Duffy, year was heavy your first pretty question, XXXX a start-ups.

La graph on slides. available, here see should Hyperzone in including on of we've think And are seen So, earnings reflected we'll 'XX through. be what's supply materials Page that's schedules 'XX, more I based at new in And least publicly that demand then plant 'XX, our Porte, our in on come that the lighter. our XX expansions Polyethylene that

again, think, coming the something, in prepared I in recovery I at mean, if what's we of 'XX, you I what X% So have or globally. essentially we think absorb can we growth to about materials, if kind go back talked

they start-up. kind we'll question a the as - some or overall was month start two, quarter find up the there a for Pennsylvania, find tends way certainly is. the is the in for have to like its market, But they'll about supply temporary to much where there as up, mean, demand large of that long plant Shell needed, to Your - be that for export way a - plant the yes, will when quarter, it product. I there their when, is example, dislocation. eventually will But such They'll Sasol into these was demand started

they when I bumps some a I would So up. don't see do expect massive but disruption, start imagine we'll

Operator

comes Our Ahmed. Hassan question from next

Your line open. is

Hassan Ahmed

two ethylene. Bob question on commodities, around one

are And styrene the near as now, market in I you It Chinese major seems the What one is seeing as seen volumes goes at look a of the curve strong. would a in you ethylene question take QX setting is price? well? other And coal? far So guys that reason that's the price around obviously think cost who asked you term escalation As the the as is are only right part. that styrene. we've very

Bhavesh Patel

Okay.

lot. up your about gone all, right, the that a - of first has are question you're price the quite So coal prices

price. and high would still the CTO ethylene in China. some given of is are ethylene So MTO And probably setting say close. needed quite for I derivatives, MTO-based level the It's demand

price are about We've the already setters. again. And come So question styrene I off styrene. second would say seen your those back

period or nice November really we had off. early come back So has in December, styrene but

the running, styrene. could contribution improvement, in to of we're but I the weak think from not pretty see a XXXX. some way think are Think about will when styrene is in units we terms all in margins styrene the there outages, when lot be are expecting

Operator

next from Our question PJ Juvekar. comes

Your line is open.

PJ Juvekar

build, inventory Bob, this flat underlying it February, and inventory driven - pricing usually by price demand is if of January global converters And that if December, in is polyethylene of XQ? increases. in ahead three that build, from sort unseasonal strong try to is months, sequentially this to XQ buy

end trying you. my to they second in question we to guess scramble they are is, buy inventory buy up too do much, now? too I So with right And half? Thank much if

Bhavesh Patel

unplanned really I question. side, the the Good were through carefully there so that in market. we hurricanes at firm just to up U.S., the mean outages enough has I Yes. some looked it there the came think, is Europe, - unusual. supply with But was price the strength somewhat been

we of barely keep pre-buy. with alone kind Speaking ourselves, can for let allow orders up any

demand simply product. customers. because have essentially hey, going We're days are So you're allow many pretty the is we to inventory our out saying, team for strict if under just to meet not trying run to pre-buy customers do it. And we're to don't the of instructions three late,

be in inventory say to the build tell in ourselves which like some going February, So find get robust there for tight we the take let's opportunity for I we're is to and can ready environment. a usual. really expect selectively we spring think us, season, And back if to think I you softness, I

Operator

David question comes from Begleiter. next Our

Your line open. is

David Begleiter

how and profitability those how two Bob, you it world gets you as back to to normal thinking you. year, Refining 'XX, if the the is - earnings about a comes about are normal? of think do Oxyfuels return And Thank businesses?

Bhavesh Patel

zero. Oxyfuels are volume. both have know, just and to forward In you moving essentially been, contributing the and looking the we're mean, been had as trouble I challenging margins a Yes, pretty It's It's we period. again.

in is still how and you So part think of should are we about what recovery the think related - earnings that I LyondellBasell us. front of

more or half. need and driving as pre-COVID levels. even travel, to could don't Oxyfuels story in back I original the that's recovers growth the And really recover more air common. vaccinations and Refining both see with as the travel recovers, we driving to of earnings vaccinations domestic contribute become we second If part So think

Operator

Our from next Jonas question Oxgaard. comes

Your line is open.

Jonas Oxgaard

wondering about feed very profitability I seems and flipped relative was spike the slate, propane your to have rapidly.

here? does is what And is do evolving to question your how your that margins? slate So feed QX

Bhavesh Patel

Yes. good It's question.

any propane minimizing all. So at if cracking we're really

call We it's it's what have ethane feed barbell and kind a of today, liquids. slate we

decent. look So still naphtha gasoline,

of profitable but And come - the is little in both ethane know either propylene where there. and And or end butadiene you so hanging with bit, off given it's the still in we're other a spectrum. are

Operator

question comes Yefremov. from Alex Our next

line Your is open.

Alex Yefremov

global When seem So U.S. Could about supply-demand it I've exports you didn't U.S. dynamics, but to noticed, half hurt went help polyethylene that. explain why? freight produced typically only rates up, polyethylene. of

Bhavesh Patel

you at demand. demand get the ways So, first find the supply think of to that all, we needed, if I meet such I overall have And to look mean, demand is the to globally. is

on. so little may and referring, a you - be so bit container Our to dislocations the

we've by much. us, For really not that been impacted

to We primarily our continue Asia. and have been exports, Latin down able but America We've Mexico, also to to contracts. long-term

by really uninterrupted impacted So rates not rates. have the exports been and or spot freight our container

So we business us. continue this as for usual

Operator

Mitsch. comes question next from Our Frank

open. is line Your

Frank Mitsch

the demand Slide come you wanted XX, polyethylene X%. mentioned I Bob, global that to XXXX was back growth to

do the I X% Europe. sold math and between You U.S. as guys the

at the any this what factoring in was is Chinese to was in average if But the about that are Hyperzone as say rate? some I And sector? operating added. capacity? industry you press mean, terms factoring you is of talk you I were in chart, of relative wondering this capacity said operating there? could in could rates have a you're the looking So and your Or obviously, whatsoever that where releases that I'm delays

Bhavesh Patel

the good the as unconstrained. Frank, us year ran had rates Yes, so polyethylene in downtime so, much good unplanned second of morning operating the We - July-August half could. And, operating do yes, foreseeable U.S., the or for expect We been part the for the we afternoon. about essentially Hyperzone future. for year. timeframe. running some but We volume we essentially that related in were to in And of was as growth we've full to and Europe since

question on that on about not supply capacity. have XX, chart side, we delays the in Chinese any put Page for Your

IHS. going it's illustrate assuming It's versus close we're are we X% of How really of - if all have growth. the we capacity really to advertised that's type of us to on having just as come to essentially it's one at absorbing So - growth X%. typical growth of the impact in economic that's front in X% year recovery more

Operator

[Operator John from next comes Instructions] Our question Roberts.

open. is line Your

John Roberts

that focus sheet focus credit Would and down balance helpful on earlier given there? reduction. metrics full be to the to Or if you to got you going getting the right later better it that was indicated flow the your would if be get to comes option be it access your on Sasol to cash debt came debt You now? you

Bhavesh Patel

option don't I down that think, come I I mean, going our is get clearly, now. think to John, is to sooner. Yes, debt the focus

So I think it's probability. a low very

Given think manage, the profile, kind but plausible don't a that's I scenario. could of earnings think I we

then focus is foremost I allocation our think. of So perhaps the in far buybacks, are but away those and pretty in increases the capital dividend modest terms first reduction, and debt

Operator

Our comes next question Blair. from Matthew

line Your is open.

Matthew Blair

then net your the spike about And spot explore talk ethylene? you you startup also, to U.S.? new capitalize just you in on this ethylene could ethylene started facilities? to have of able recent export Bob Are position some long up the given in

Bhavesh Patel

Yes.

position There that we've our up, Sasol merchant fortunate result and a have acquisition. of half - facility. been gone as timing values of with ethylene it's our So, Matthew the been because has we've acquiring increased

increase not exporting, are we in the price. We have spot benefited but from

know, contract negotiations. moves has spot First and that you foremost, as impacts a the price

have So plans. formulas of our contract been has Most spot moving price contract up.

So we benefit way. that

- it. of bit And some a spot quite sales have in of volume does Sasol

ethylene that turnaround of this So we'll starting this March. probably very margins capitalize the schedule half of through we've first I been on in persistent be able unplanned high year of in to most the improvement because think

Operator

McNulty. John comes our question And last from

open. is line Your

Bhavesh Mahesh Lodaya

for Lodaya look to When John. is we to close a are polypropylene, volume for we at back levels. This the Mahesh pre-pandemic recovery up

going still of obviously are some we construction some markets. of recovery key in commercial the see However, those demand from autos, to end

new now So how how then pandemic Thank of of base by has was much the created permanent recovered? the ongoing demand you. much itself? demand And pre-pandemic

Bhavesh Patel

Yes. Great question.

of part for I'll going the then the statistics question, second qualitatively first I'm and talk So kind to about give you of half. your

how 'XX polypropylene 'XX. 'XX, QX up our U.S., at think volumes, up I'll QX to look in and tell likely to you up if So XX% you we're the from EAI, is shaping XX%. we compared QX 'XX, In QX

China grew from 'XX. Another about sort in that data of point XXXX to XX% is polypropylene demand

Now, and question pretty medical use your are year. the pandemic-related, of been gowns about of even I frankly, and driver. second think And masks more next important into most for of certainly after pretty maybe it's and the widespread, that, year all I be masks this vaccinations still and will even think

estimate, don't So is accounted the X% by growth if the the a to the were you growth to number for of XX% that percent polypropylene masks was maybe have to - it's related on I masks. of for of I growth. the what I Americas mentioned for But X%

Bhavesh Patel

right. All

Thank closing our just hanging I So before I few remarks you there. question. last I'd let a to in that go. offer all think was like you for

XXXX, first significant our the of first of emergence XXXX. our the company performance the downturn resilient since completion with back in you've So through all, from seen

increased a our quarter preview you fourth power. of results Our earnings have given

strong into assets, Going order markets and we tight rising XXXX, books, more have activity. economic

confidence of which the quarter. into first continuing for improvement should provide All

high much scheduling second relatively levels light. LyondellBasell's downtime While industry XXXX is our is planned maintenance, of of quarter for

second Oxyfuels capture Our mobility assets year. the and during the increased ready half of seasonal improving businesses Refining poised from are demand, are benefit to to

of and us increase our we our balance well strengthen to continue flow positions through I this think cash sheet as way XXXX. work all to

company we our and to a great in XX updating look days. in interest your Have for you weekend. thank forward So about you

Operator

for conference. concludes That you participating. today's Thank

may time. this disconnect at You

David Kinney	Director, IR
Bhavesh Patel	CEO
Michael McMurray	CFO
Steve Byrne	Bank of America Merrill Lynch
Bob Koort	Goldman Sachs Group
Arun Viswanathan	RBC Capital Markets
Vincent Andrews	Morgan Stanley
Mike Sison	Wells Fargo Securities
Kevin McCarthy	Vertical Research Partners
Jeff Zekauskas	JPMorgan Chase & Co.
Duffy Fischer	Barclays
Hassan Ahmed	Alembic Global Advisors
PJ Juvekar	Citigroup
David Begleiter	Deutsche Bank
Jonas Oxgaard	Sanford C. Bernstein & Co.
Alex Yefremov	KeyBanc Capital Markets
Frank Mitsch	Fermium Research
John Roberts	UBS Investment Bank
Matthew Blair	Tudor, Pickering, Holt & Co.
Bhavesh Mahesh Lodaya	BMO Capital Markets

LyondellBasell Industries (LYB) 29 Jan 212020 Q4 Earnings call transcript